Businesses Deploy Gen AI Across Procurement and Supply Chain

Research from Ivalua shows a quarter of UK businesses have deployed Gen AI tools in procurement and supplier management (Credit: Ivalua)
The Gen AI revolution continues, with new research from Ivalua showing 44% of UK organisations are using the technology in procurement operations

Almost a quarter (24%) of UK businesses have deployed generative AI (Gen AI) tools in procurement and supplier management in the last 12 months, according to research from Ivalua, a global leader in cloud spend management solutions.

A further 55% of UK businesses are either in the process of implementing or are considering implementing Gen AI, while less than one in five (19%) have no plans to implement Gen AI.

Ivalua's in-depth conversations with 300 supply chain and procurement decision-makers across the UK coincided with its Innovation on Tour.

Researchers from Sapio Research, which conducted the survey on behalf of Ivalua, discovered that organisations using Gen AI tools are seeing a 44% reduction in manual processes across the procurement and supply chain function.

These firms are increasing efficiencies by using Gen AI for task automation (69%), internet research (67%), document analysis (59%) and content creation (48%).

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Fear of AI persists

Ivalua's findings demonstrate optimism regarding Gen AI's potential to help procurement roles improve in the future, with 54% of respondents it will improve efficiency and 36% saying the emerging technology will free up time so more attention can be spent on strategic objectives.

What's more, a further 61% agree that harnessing Gen AI will be vital to effective spend management.

Despite this positivity, some fears persist among procurement leaders, with 35% expressing concern they will eventually be replaced.

“Gen AI represents huge productivity gains and resource unlock for procurement,” says Vishal Patel, VP of Product at Ivalua.

“But to succeed, careful change management and education are required to show employees Gen AI will enhance their role rather than replace it.

"With employees on board, businesses can focus on harnessing Gen AI to eliminate routine and time-consuming tasks while focusing on higher-value activities. But another key barrier remains – addressing a lack of progress on digitisation.”

Vishal Patel, VP of Product at Ivalua (Credit: Ivalua)

Is digital transformation in procurement stalling?

Ivalua's report highlights a belief that digital transformation in procurement has stalled in recent years.

It states that, on average, organisations have digitised 48% of their procurement process, just 3% higher than in 2019.

This lack of progress is creating challenges for those looking to adopt Gen AI:

  • Poor data quality: More than one in five (22%) procurement leaders cite poor data quality as a challenge to adopting Gen AI in the procurement and supply chain function
  • Lower technical skills among teams: More than a quarter (28%) of procurement leaders say user resistance is a top challenge to adopting Gen AI, which suggests a lack of digital skills or technical confidence will hinder progress
  • Lack of guardrails and processes: One-third (33%) of procurement leaders are concerned their team is using Gen AI tools without their knowledge, which is why more than two-thirds (68%) agree they need to put more guardrails in place to ensure the accuracy of Gen AI outputs.

“Businesses need a solid data foundation for procurement and supply chain teams to effectively harness AI to improve efficiency and contribute to effective and timely decision making,” adds Vishal.

“But the lack of progress in digitisation and common data challenges suggest there is a significant gap to be bridged before Gen AI can deliver more strategic value.

“Most procurement leaders agree that if their organisation doesn’t embrace Gen AI in procurement, they will lose out on cost savings and broader value-creation opportunities.

“So, businesses must act now to digitalise and close the technology and data gaps in their procurement function. If not, they will struggle to measure up against AI-powered competitors, potentially losing customers and market share.”

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